BJBR
Contact our analyst Lingga
34% upside
11 March 2020
Price Rp945
Target price Rp1,270
Commercial Loan Growth
Loan Growth increased to 8.7% in FY19 up from 6.1% in FY18. The increase mainly came from Commercial loans which saw 8% growth from -9.7% in FY18, driven by government spending on infrastructure in West Java. In FY19, micro loans grew by 5.5% from 15.6% in FY18. The higher micro growth in FY18 was a result of the Bank’s expansion through rural banking and government programs (KUR). In FY18 rural banking grew IDR400bn and the government program grew by IDR200bn, while in 2019 although the government programs grew IDR.300bn, business through rural banks decreased by IDR.100bn. We estimate loan growth will be higher at 10.4% in FY20.
Weak Fee Income
Fee-based income only increased by 1% compared to more than 14% growth in FY18. On QoQ basis, fee-based income has decreased by IDR5bn. However a positive is that the IDR244bn fee-based income in 4Q19 was still higher than the average fee-based income per quarter which was IDR232bn for the full year FY19.
2020 Growth Driver
Consumer and commercial businesses will remain BJBR’s growth drivers in FY20, with civil servants and pensioners as captive customers, as well as commercial businesses which are supporting government projects.
Valuation: 34% Upside potential, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR1,270, which would mean the shares trading at 1x PBV and gives 34% upside potential. Buy.
Loan Growth increased to 8.7% in FY19 up from 6.1% in FY18. The increase mainly came from Commercial loans which saw 8% growth from -9.7% in FY18, driven by government spending on infrastructure in West Java. In FY19, micro loans grew by 5.5% from 15.6% in FY18. The higher micro growth in FY18 was a result of the Bank’s expansion through rural banking and government programs (KUR). In FY18 rural banking grew IDR400bn and the government program grew by IDR200bn, while in 2019 although the government programs grew IDR.300bn, business through rural banks decreased by IDR.100bn. We estimate loan growth will be higher at 10.4% in FY20.
Weak Fee Income
Fee-based income only increased by 1% compared to more than 14% growth in FY18. On QoQ basis, fee-based income has decreased by IDR5bn. However a positive is that the IDR244bn fee-based income in 4Q19 was still higher than the average fee-based income per quarter which was IDR232bn for the full year FY19.
2020 Growth Driver
Consumer and commercial businesses will remain BJBR’s growth drivers in FY20, with civil servants and pensioners as captive customers, as well as commercial businesses which are supporting government projects.
Valuation: 34% Upside potential, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR1,270, which would mean the shares trading at 1x PBV and gives 34% upside potential. Buy.
Previously
